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Prices on the international market continuing to increase but slightly fall at the end of the week but slightly fluctuated in the domestic market for LPG in the immediately preceding week it.


Key Development in Nigeria's LPG Market

The price of LPG in the international market continued to fluctuate from the beginning of the week towards the end of the week. However, it ended at a slightly higher level compared to the price towards the end of the week.

Week-on-week differences in the price of LPG at the depot level have not changed much in the week under review.

The difference between prices per kg of LPG at the depots in Nigeria and prices at the international market are becoming narrower as was recorded from the previous few weeks.

Regional disparities in the retail prices of LPG within the country continue to persist.

Regional Disparity in Retail
Regional disparity in the prices of LPG across the country has been a regular feature of the Nigerian LPG market. Though the South-south geopolitical zone hosts the great majority of depots in the country due to its proximity to the ocean, prices have been highest in the region.

Macroeconomics Condition and the LPG Market

Exchange rate value still persistent at N380 to US.$1 throughout the week (Figure D), though disparities continue to widen in the parallel market.

As in the previous week, the Nigerian Foreign Reserve continues to slightly fall despite the devaluation and pegging of the Naira at N380 to US$1, the slight decrease has been persistent for four weeks.

For the gas market, the Purchasing Managers Index (PMI) of the CBN reports a decline in November for the following order; Electricity, gas, steam & air conditioning supply Index category while Business Activities and employment & inventory contracted in the same month. The declining trend in Business Activities and employment & inventory signal contraction in demand in the respective value chains.

Inflation remains high. The persistent rise in inflation in the past more than 11 months (in October 14.23, September 13.7%, August 13.2%, July 12.8%, June at 12.6% from the 12.4% recorded in May 2020) has implications for the price of LPG across the country. More importantly, the composite food index rose to 17.38 in October from 16.16% in September and 16.0% in August, 15.48% in July 2020 compared to 15.18% in June 2020.

The Prices of crude oil in the international market continue to fluctuate throughout the week but end up increasing at the end of the week (Figure E).

Outlook: Coming Weeks
We expect a more than proportionate rise in LPG prices at the retail level (as the cost of transportation rises due to the hike in fuel prices coupled with inflation) compared to the depot/international prices in the coming weeks.

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